What sort of credit do I need?

If you decide you want to borrow money you need to ask yourself some key questions to help you decide your best course of action.

• Do you require short term borrowing
• If so is the amount small

If the answer to the two questions above is yes you may be best arranging an overdraft at your bank or borrowing on your credit card credit card borrowing is never the cheapest source of finance but for short term borrowing many people like the convenience.

Do you want to borrow for a longer period perhaps up to a year or more An overdraft may be useful or if you have a gold card you may be able to borrow amounts of up to £10000 at a reasonable interest rate. If you have a life insurance policy contact the organisation which issued it - you may find you can borrow money relatively cheaply by using it as security.

Do you want to borrow for say 1 to 5 years If so consider a personal loan borrowing against your life insurance policy or taking out a second mortgage.

Another aspect to consider is your credit rating. Any bad debts or county court judgements may affect your ability to borrow money.

2009-02-17 00:00:00 © Moneyextra.com